Which of the following statements is CORRECT?
A. One disadvantage of operating as a corporation rather than as a partnership is that corporate shareholders are exposed to more personal liability than are partners.
B. Relative to proprietorships, corporations generally face fewer regulations, and they also find it easier to raise capital.
C. There is no good reason to expect a firm's stockholders and bondholders to react differently to the types of assets in which it invests.
D. Stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns.
E. Stockholders in general would be better off if managers never disclosed favorable events and therefore caused the price of the firm's stock to sell at a price below its intrinsic value.
Answer: D
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